Woori and Shinhan, Will Their 'Efforts to Restore Damage' Be Recognized?... Financial Sector Calls It "Evasive Severe Disciplinary Action"

Financial Supervisory Service Includes 'Efforts to Restore Damage Such as Full Compensation to Financial Transaction Victims' as Consideration in Disciplinary Enforcement Rules
Woori Bank Prepays 51% of Principal and Prioritizes Compensation for Estimated Damages
Financial Sector Criticizes FSS's Severe Disciplinary Actions as Avoidance of Responsibility

[Asia Economy Reporter Wondara] Attention is focused on whether Woori Bank and Shinhan Bank will be recognized for their 'efforts to restore consumer damages' at the Financial Supervisory Service (FSS) Disciplinary Committee. However, within the financial sector, there are ongoing criticisms that the FSS's sanctions are 'evasive severe disciplinary actions' regardless of the level of punishment.

According to the financial sector, the FSS will hold a disciplinary committee meeting on the 25th regarding Woori Bank, Shinhan Bank, and others. The FSS has preliminarily notified Sohn Tae-seung, Chairman of Woori Financial Group and former Woori Bank President during the Lime scandal, of a suspension from duty, and Jin Ok-dong, President of Shinhan Bank, of a reprimand warning.

Within the financial sector, there is a forecast that Woori Bank and others may become the first cases to receive reduced sanctions by being recognized for their efforts to restore consumer damages. In May last year, the FSS added 'whether sufficient compensation and other efforts to restore damages to financial transaction parties' as a consideration factor in sanction mitigation in the detailed enforcement rules for financial institution inspections and sanctions. If the Financial Consumer Protection Department presents a positive evaluation of Woori Bank's consumer protection efforts, Woori Bank will receive reduced sanctions.

Woori Bank is currently proceeding with the process by agreeing to first compensate estimated damages for other Lime funds whose losses have not been confirmed, and then settle additional recoveries afterward. In June last year, Woori Bank decided to prepay about 51% of the principal to investors of the Lime Pluto FI D-1 Fund and the Tetis Fund. Shinhan Bank also decided in June last year to prepay 50% of the principal to investors of the Lime Credit Insured (CI) Fund.

However, within the financial sector, criticism continues that the FSS's ongoing punishments against these financial companies are 'evasive severe disciplinary actions.' It is argued that although the financial authorities relaxed regulations under the pretext of fostering the capital market, which led to these incidents, they are placing all responsibility solely on the sellers. The Woori Bank labor union strongly condemned the 'evasive severe disciplinary actions that shift all responsibility to financial companies without addressing the issues of deregulation in the private equity fund market and the incompetent supervisory system of the regulatory authorities' in a statement on the 4th, pointing out that 'fundamental problem identification of the FSS's incompetent supervisory system is being neglected.'

Meanwhile, the disciplinary committee is an advisory body to the FSS Governor, and the final sanctions will be confirmed in early next month through the FSS Governor's approval, Securities and Futures Commission review, and Financial Services Commission resolution for each subject of action. CEOs confirmed for severe disciplinary actions can only complete their term if currently in office. Reemployment in the financial sector will be prohibited for the next 3 to 5 years. Previously, on the 5th, the FSS Disciplinary Committee imposed a one-month partial suspension of business and a fine on Industrial Bank of Korea, which sold Lime and Discovery funds. Former IBK President Kim Do-jin received a minor disciplinary action. Although a 'reprimand warning' was preliminarily notified early last month, the disciplinary committee lowered it by one level.

This content was produced with the assistance of AI translation services.